Maruti Suzuki's problems with regard to its Gujarat project are far from over as some proxy shareholder advisory firms today said they may recommend to investors to vote against the revised proposal as well.

Faced with dissent from institutional investors, including private sector mutual funds and state-run LIC, the carmaker last week decided to seek minority shareholders' nod for a proposal under which its Japanese parent Suzuki Motor Corp would implement a Gujarat plant.

Officials at some of the 16 private institutional investors (including mutual funds and insurance companies) have welcomed the company's decision to seek approval from minority shareholders, although they are waiting for the fine-print of the revised proposal to finalise next move.

Certain changes would also be made to the original plan before it is put for vote by Maruti Suzuki India Ltd (MSIL).

Foreign institutional investors (who hold 21.5 per cent stake) would play a key role, as their stand is yet not clear.

"The proposed structure creates uncertainties and provides scope for misalignment of interests. When the proposal is put to vote, we are likely to advise voting against the proposal," InGovern Research Services Founder and MD Shriram Subramanian told PTI.

According to him, the proposed structure is gravely unjust to minority shareholders.

"Suzuki should have infused funds into MSIL or increased their stake in MSIL through an open offer, with MSIL being their only investment platform in India," he noted.

Another proxy firm IiAS said Maruti's recent announcement doesn't change its fundamental objection to the deal.

As per the proxy firm, the deal is unnecessary and needlessly adds to the complexity and ambiguity of the operating structure.

"Maruti has enough liquidity to fund the entire capital expenditure at Gujarat, and its excess liquidity will be better used if it is invested in operations," IiAS said in an e-mailed statement.

"Maruti's return on capital employed is around 15 per cent, while its investment yield is much lower at 7-8 per cent. Therefore, IiAS continues to maintain that Maruti must invest in the Gujarat plant and not Suzuki," it added.

As per the revised plan for Gujarat project, Suzuki Motor Corp, through its wholly-owned subsidiary, would make the investment through depreciation and the equity brought in by parent without 'mark-up' on cost of production.

In case of termination of the contract manufacturing agreement between them, the facilities of the Gujarat subsidiary would be transferred to Maruti Suzuki India Ltd (MSIL) at book value and not at fair value as was envisaged before.

However, another proxy firm SES has said it is now in favour of Maruti Suzuki's Gujarat proposal.

When contacted, a Maruti Suzuki India spokesperson said: "It is clearly more beneficial for Maruti this way, more so after the Board decisions on Saturday".

In an e-mailed statement, proxy firm SES said that it would recommend shareholders "to engage positively with the board to address the additional remaining concerns."

These concerns include duration for which export territories are exclusively assigned to MSIL, voluntarily adoption of disclosure norms as applicable to public listed company in India by subsidiary and MSIL having the authority to get cost-audit of subsidiary done at any point of time.

The proposal would need approval from three-fourth of minority shareholders in the company. Promoter Suzuki holds nearly 56 per cent stake, while 44 per cent stake is held by public shareholders.

Among public investors, LIC holds the maximum of about 7 per cent, while other domestic institutional investors also have nearly 7 per cent stake. FIIs, including HSBC, Credit Suisse and Norway government's Pension Fund, have 21.5 per cent equity, while retail investors have over 8 per cent and nearly 6 per cent is with bodies corporate.

Suzuki Motor Corp, in January, announced that it would invest USD 488 million on the Gujarat plant, which was originally proposed to be set up by subsidiary MSIL (Maruti Suzuki India Ltd).

Maruti had originally proposed to set up the plant near Mehsana and had in 2012 bought land before SMC decided to takeover it to allow the Indian arm to focus on product development and marketing.

Opposing the move, MSIL's institutional investors approached Sebi, seeking its intervention to safeguard minority shareholders' interests. Private sector mutual funds and insurance companies, which own almost 7 per cent of the company, led the dissent.

State-run Life Insurance Corporation of India (LIC) had also sought clarifications from MSIL about the Gujarat project.